Member Article

Occupier Confidence on the Rise

The Yorkshire Industrial market can reflect on a positive six months of 2012 with an 88% increase in take-up on the same period last year, according to new research from property firm CBRE.

The firm’s H1 2012 Industrial MarketView indicates that occupier confidence is improving across the region with 1.255 million sq ft take-up in the first half of 2012.

Although availability has now fallen to 3.97 million sq ft, 2.51 million of which is new, this still remains the highest proportion of available space in the country. However, Yorkshire is now one of the few parts of the UK with a sufficient choice of good quality buildings offering the best choice for occupiers who may be finding it hard to find space in neighbouring regions and as such is in a strong position to capitalise on recovering occupier confidence.

Toby Vernon, Senior Director of Industrial Agency at CBRE’s Yorkshire offices, said; “Occupier confidence is improving and take-up for H1 2012 is already way ahead of the 2011 year total. The take-up figures do include the 856,000 sq ft commitment by Aldi on a new site in the Dearne Valley and although the imminent start on site for this project shows confidence, generally the underlying demand picture for the region remains subdued.

“There were some encouraging signs of a resurgence in occupier interest at the start of the year, with requirements from some large retail names. However, as economic uncertainties grew and concerns about the strength of the Eurozone returned, occupiers once again retreated. Interest has emerged from high street and online retailers, particularly discounters who continue to expand. Nevertheless the region, particularly South and West Yorkshire, has the potential to benefit once confidence returns and since the start of the summer there has been an upturn of interest.

“The availability of stock within this region has created an opportunity for occupiers and the larger schemes in particular are now unique across the UK. Yorkshire has three schemes that could accommodate a requirement of over 400,000 sq ft; SIRFT Sheffield (647,000 sq ft), Logistics Property Partnership Sheffield (formally Blade – 412,500 sq ft) and Sherburn 550 near Leeds (550,000 sq ft).”

The statistics show that investment volumes have rebounded with the year to date total significantly boosted by the sale of B&Q’s 800,000 sq ft logistics facility at Redhouse Interchange in Doncaster for £36.2m, an initial yield of 9.5%. In addition, also at Redhouse Interchange, a new 264,000 sq ft warehouse recently let to Next was purchased by NFU for £16.8m, a yield of 6.65%. Both deals are typical of the current trend amongst investors in commercial property to seek safe havens for their money.

Robin Bullas, Associate Director at CBRE Leeds explains; “The fundamentals we saw in 2011 have continued into 2012, with prime logistics units highly sought after and a number of wealthy individuals continuing to seek opportunities where pricing has moved sufficiently.

“Investors are either looking for secure single let income of 15 years and beyond, with guaranteed uplift or multi-let short term asset management opportunities.”

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